The real situation in the stock market

[shanen]

The stock market has become a total scam, with stock prices that are completely divorced from the actual values of the companies. Essentially the 'market cap' can rise without limit based on the belief that some other sucker will buy the shares. Enron showed how to convert the faked market cap into credit and the company became a hollow bubble.

Guess what. Dubya's cronies never fixed it.

The stock prices always tend to move together. It's kind of like the rising tide lifting all boats--or sinking them if they're actually full of holes. The 'liquidity' of credit has been making it possible to disguise the reality that many of the corporate boats have been sinking--but the liquidity has been drying up for a while.

Obviously I can't be sure about the future, but I suspect that what we're seeing now is that many of the companies that have leveraged themselves against their stock prices are finding that they have to 'adjust' their financial statements. They are being forced to show losses. Of course they have been trying to claim the losses are one-time rather than systemic, but if the stock markets slide far enough, that part of the system is going to collapse.

Expecting Dubya to ride to the rescue? Sorry, but this is liable to be a financial deluge that makes Katrina look like a spring shower.

[NMDemDist2]

1. welcome to DU shanen!

You're preaching to the choir here, but welcome

on another note, you may find our handy DU Glossary both entertaining and informative.

http://www.democraticunderground.com/discuss/duboard.php?az=view_oet&address=358x190

[MercutioATC]

2. We may see a 3rd quarter turnaround, but...

...I'd stay in cash until at least then.

[DS1]

3. Essentially the 'market cap' can rise without limit based on the belief that some other sucker will

buy the shares.


Yes, that's how it's worked from day one.

[cyberpj]

6. AND that's why BushCo want to kill SS and privatize retirements so badly. nt

[stevebreeze]

7. Kinda both what you and Ds1 said

the SS "reform" would have infused the stock market with a ton more cash driving up stock prices, and more importantly the wages of brokerage CEO's. This would have kicked the can down the road making things appear far better then they would have otherwise. Then all the ordinary people hold stock as a retirement savings would have had a rude awakening when many many boomer's retired at the same time collapsing the inflated stocks back down to reasonable size.

[elehhhhna]

8. I think that prospect's kept the market up for the last 5 years or so.

[Hydra]

4. Bushco won't fix it

because this was all rigged by the fed. Deliberately.

Expect any solution coming from the WH to fundamentally change how things are currently- in their favor.

And guess what? The panic level will be high enough to allow them to push it through. I suspect "The Amero" will make its debut at that point, but that's just my take on it.

[upi402]

9. the "Amero" replacing the dollar

brought about by our economic collapse and China's holding so many worthless dollars.
They will be forced to negotiate an exchange rate with the new Amero.
This will bring aboiut the North American Union (Canada, USA, Mexico).

Did I get that right, digest form anyway?

Any ideas on probability?
Time frame?

[ixion]

5. dubya ride to the rescue? Well, first off, he's scared of horses

second of all, he's never rescued anything in his life. Everything he touches turns to sh*t.